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My wife and I are trying to buy a house that is for short sale in Gaithersburg, Maryland. We submitted the contract on 11/2/2010. The only contingency on the contract was that the house must pass the appraisal. The Buyer accepted the offer the next day, so the contract is ratified and the house status is "Contract/No KO". There's only one mortgage on the house (i.e. one lender). It has now been over 70 days since the contract was ratified. My agent just called me. He said the seller's agent has told him that It seems that the seller is not cooperating w/ the bank in providing the necessary info for the Bank to sign off on this deal. Nothing has been submitted to the bank yet. The seller agent has not been able to contact the buyer recently. My agent told me there's nothing much I could do if the buyer does not cooperate, and the house will then go to foreclosure. I just wonder is that true, i.e there's nothing we, the buyers who have the signed contract, could do under such circumstance?
Thanks so much.
Your post is a little confusing and I think you are using the word "buyer" in places where you mean "seller".
Short sales are contingent on the bank agreeing to let the seller sell it for less than they owe and they won't do it without the necessary info from the seller. I think your agent is telling you the right thing.
Mistakes made in a hurry. I am the buyer, not the seller. There are couple places in my original post I wrote "buyer" instead of "seller" by mistake...
The house was listed for a short sale. I have just taken a careful look at my contract (GCAAR Regional Sales Contract). I saw the followings:
#6) Settlement - "within 45 days after contract ratification"
GCAAR Addendum of Clauses (For use with MAR and Regional Contract):
#3) "As-Is" Property Condition - ... conditions to be determined as of the "Date of Ratification"
#9) Appraisal Contingency - ... contingent until the "21th" day after the Date of Ratification
#15) Third Party Approval - "NOTHING SPECIFIED IN THIS ITEM. The blanks are blank !!!!"
So I see one contingency, i.e. Appraisal contingency. I see no short sale contingency. Perhaps, my agent made a mistake and did not fill item #15 above properly.
The problem is that both my wife and I love that house. We do not want to walk away from the contract. We do not mind the long wait. We would like to do whatever it takes to complete the sale
If there is no third-party contingency on the contract, and the seller signed the contract, is he not obligated to move forward to settle? What if the bank is about to foreclose the house that is under contract without a third-party contingency?
Should I get an attorney to take a look at the contract?
If the seller won't cooperate, you should move on to another house. You can't force the seller to submit the offer to his bank, or provide the needed documentation. Even without a specific short sale contingency in the contract, the seller can't complete a short sale without bank approval to clear the lien. Your contract will not prevent the bank from foreclosing unless the bank agrees to postpone such action.
If you feel that your agent is not performing to your needs, then meet with their managing broker.
I recommend consulting with an attorney if you don't understand your contract and can't get good answers from your agent or broker.
Mistakes made in a hurry. I am the buyer, not the seller. There are couple places in my original post I wrote "buyer" instead of "seller" by mistake...
The house was listed for a short sale. I have just taken a careful look at my contract (GCAAR Regional Sales Contract). I saw the followings:
#6) Settlement - "within 45 days after contract ratification"
GCAAR Addendum of Clauses (For use with MAR and Regional Contract):
#3) "As-Is" Property Condition - ... conditions to be determined as of the "Date of Ratification"
#9) Appraisal Contingency - ... contingent until the "21th" day after the Date of Ratification
#15) Third Party Approval - "NOTHING SPECIFIED IN THIS ITEM. The blanks are blank !!!!"
So I see one contingency, i.e. Appraisal contingency. I see no short sale contingency. Perhaps, my agent made a mistake and did not fill item #15 above properly.
The problem is that both my wife and I love that house. We do not want to walk away from the contract. We do not mind the long wait. We would like to do whatever it takes to complete the sale
If there is no third-party contingency on the contract, and the seller signed the contract, is he not obligated to move forward to settle? What if the bank is about to foreclose the house that is under contract without a third-party contingency?
Should I get an attorney to take a look at the contract?
Before you and the seller had a contract the seller made a contract with his bank about buying this house. He can't sell it to you in a short sale unless the bank agrees to it.
Why even push it at this point? Just move on and spend your energy on something else. What if the uncooperative seller decided to trash the house in response to you pushing things?
Banks / investors are only one piece of the delays with short sales and those can be considerable. Also consider the seller is likely living in the house mortgage free... Depending on their personal situation (i.e. lack of employment), there could be very little incentive to getting the deal done quickly.
The seller is probably fighting with the bank for relief over the deficiency between what you are paying and what they owe. The bank can take up to six months to make a decision.
Wondering if anyone know is there a law (again in Maryland in particular) that states that a seller must obtain the bank's approval for a short sale his house before he could put the house on the market for a short sale? Or should the seller's agent make sure that the seller is qualified for the short sale before listing the house for a short sale for the seller? In my case, it seems that the seller did not get the SS approval from his bank then. And now the seller's agent is trying to track him to have the paperworks submitted.......
BTW, the seller does not live there. It's a vacated house. I think he owns another house somewhere else. My agent now suspects that this guy owes a lot more than the house is worth, and that he might not have been experiencing such a hardship that qualifies him for the SS approval, and he does not want to lie now and risk to go to jail...
Wondering if anyone know is there a law (again in Maryland in particular) that states that a seller must obtain the bank's approval for a short sale his house before he could put the house on the market for a short sale? ...
Highly unlikely, but don't know MD laws. Most banks won't give pre-approval anyway. They want to see an offer before they will accept paperwork and take time to review. Although an agent may be able to get an overall sense if a seller may qualify, it will still be up to the bank to decide. A good short sale listing agent should have a document package ready to submit when an offer comes in.
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